Thursday, May 19, 2011

$Rifin - Financials Triangle Broken

I have been warning about the weak performance of the Financial sector for some time.  There is a large triangle which appears to be broken now.  The small bounce over the last few days may just be a backtest of the lower triangle line. 

A few days ago Rifin tested near the March lows!  Frankly, that is disturbing...  The difference between SPX and Rifin performance is beyond glaring, and I think this is a very dangerous situation now with the triangle breach. 

Tomorrow, May 20th is when my next time cycle is due.  Perhaps a backtest of the broken lower orange fork line tomorrow might be next.  If so, then tomorrow could be a high for the market, with a serious decline to commence early next week.  

Upon careful consideration I have decided that it is simply too dangerous to have any long bullish exposure to this market until further notice. 

I highly recommend that it is time to review exposure immediately for the sake of risk management.

2hour Chart

Tomorrow, I am going to sell my Silver position.  The Silver pattern is interesting and I am going to be following that closely, but Financials risk trumps Silver in my eyes.  I am concerned about the situation with the financials, and will play it safe.  There are lower risk entries on Silver that I will look at instead once things further develop. 

4hour Chart


  1. what is your current target SC? for the S&P

  2. Low 1200's. I'll show some updated calculations for that target more specifically on the weekend.

  3. The mkt should still have one last surge up today, early Monday morning may be the optimal spot to short.

  4. Monday could be ugly by the end of the day though. Later today might present a spot to short, and then top up positions first thing Monday.

  5. Still looking for 1 more surge SC? Or are we broken here? That is my thought.

  6. I expect 1 more surge today/first thing Monday. Monday/Tues I expect to see at least a test of 1318, maybe even 1294.

    First week of June looks to me where things really go sour.

    I understand the dynamics on Silver now too. My inverse pattern was right, but it is only pointing to a small bounce here imo. The bounce has started with only moderate upside here. A big downdraft is coming.

    I'm looking for $18 Silver in June. That will be a fantastic buy for a strong bounce up to $40 over a few months. Gold may test $1270 in June.

    So obviously I am taking my Silver profits today.

  7. Surging up now, and more up likely, but that is confirmation. Don't be fooled by the surge up, that is extremely bearish activity in the patterns.

    I'll show what I mean with more updates on the weekend.

  8. SC, are you only going to focus on your SPX short or you also consider shorting silver on Monday? Given your price targets and the fact that with silver there is no PPT stepping in at ANY semblance of a sell-off, I wonder if the silver short might not work out even better.

    Only thing that might hold up silver in a risk off environment could be its implicit link to gold, which often trades as a safety play (today being a good example of just that).

  9. My plan is to short SPX and long VIX. I am contemplating that Silver short as well, and I'll probably do it. Still a little early to short Silver optimally.

    That was a question I considered earlier in the week. Silver can act as a safe haven, but I do think my previous pattern was just pointing to a moderate bounce here. It took me a little while to put the puzzle pieces together and see the full picture. Not a pretty sight.

    Silver is going to get a big bounce but that starts from lower levels imo.

  10. Financials are trading at the lows of the day, they still might gap up/bounce Monday morning but looks like they have lost the support of the triangle into the close today.

    Mkt seems to me it still should bounce Monday morning first thing but then down hard after.